FORECASTING FOR INVENTORY CONTROL

Abstract

The company in this case is a manufacturer of spring beds. This research aims at determining the best method to forecast the company’s production level, as well as finding out the economically efficient amount of raw materials for the company to order, and the best delivery routes for its products, especially spring bed type 101.

Six forecasting methods are used: Linear Regression, Moving Average, Weighted Moving Average, Exponential Smoothing, Exponential Smoothing with Trend and Naive method. Economic Order Quantity (EOQ) is used to calculate raw materials inventory, and a Decision Tree to determine goods delivery processes. The research results suggest that the company use Linear Regression as it has the smallest MAD and MSE of the six methods. The company also has to order an economical amount of raw materials and choose shipping as a means of distributing its products to the location specified in this study.